Governor Christie's Proposed Budget Supports Programs Important to Biotech Growth
The proposed Budget now goes before the State Legislature for its consideration. The final Budget will be adopted by June 30, 2011.
Tax Cuts 1. Change the way the state taxes businesses, which is based on their payrolls, property and sales. The proposed budget wants to assess the levy on sales only, known as the single-sales factor. There will be five year Phase-in.
2. Currently the amount of research tax credit claimed for any single year cannot exceed 50% of that year’s tax liability prior to the consideration of this credit, and it cannot reduce the tax liability below the statutory minimum. The proposed budget wants to increase that credit to 100%.
3. Reduce by 25% the minimum tax on S corporations, which are owned by no more than 100 shareholders, who are allowed to deduct the companies’ losses and gains on their income tax statements.
4. Add $30 million to the Technology Business Tax Certificate Transfer Program (NOL Program), thereby restoring funding for the program to its previous level of $60 million.
Qualification of the program:
- Incorporation date is the original date including predecessor entities
- The company needs to meet the employment requirements on 6/30/2011 AND at time of sale of NOL. The applicant must certify that it still satisfies the employment requirement on the date the applicant receives the Tax Credit Certificate.
Full time employees (35 hrs per week) in NJ based on the number of years since the earliest incorporation:
Number of full-time employees Number of years since incorporation 1 < 3 years 5 3 < years < 5 10 > 5 years
- Must have intellectual property by owning patent, copyright, or exclusive licensing agreement.
- Parent or subsidiary itself can’t have net operating income for the most recent two years. Operating income will exclude the sale of NOL.
- $15 million cap per company
- The applicant must be qualified as a Biotechnology or Technology Business.